In Luxembourg at the end of Q1 this year, the real estate vacancy rate stood at 5.52%, a decrease of 16.36% compared to the same period in 2012, even though the total surface area increased by 5.64% to 3.439 million m2. In general, beyond the vacancy rate, the first signs of the real estate market in 2013 are good. However, we should be prudent as we encourage discussion regarding the state of the nation address by Prime Minister Juncker on 10 April. Prime Minister Juncker said that growth forecasts vary considerably throughout the year. Thus, GDP in 2012 showed a slight increase of 0.3%, while it was expected to grow by 2%. The growth forecast for Luxembourg in 2013 is 1% and even more in 2014 (2.3%) and 2015 (1.9%). But if the Prime Minister was cautious regarding macroeconomic estimates, he is confident in the future of the Luxembourg financial centre, which represents 36% of GDP in the Grand Duchy. While Luxembourg is still the target of harsh criticism from some Western countries, industry professionals know that reputation is no longer based on secrecy to be abolished in 2015, but on a solid know-how and actual expertise of financial engineering. The good performance of the financial sector that employs more than 40,000 people is important for the real estate sector in Luxembourg. For comparison, the total number (both domestic and cross-border) of employees in Grand Duchy is 357,000. The main employers, the Government and the City of Luxembourg use the services of some 80,000 people, plus 15,000 in the European institutions. These are also the source of a significant portion of real estate projects: 190,000 m2 are already under construction and more than 120,000 m2 are planned. At the end of March, the decision to rent totaled 27,151 m2, an increase of 9.87% compared to the first quarter of 2012. The surface area is slightly lower (-5.15%) to 460 m2 on average. Ten transactions were for surfaces larger than 600 m2: The University of Luxembourg has taken possession of a university residence of 4,654 m2 in Esch-Belval in the Square Mile; KPMG continues its Bourmicht development, with 3,750 m2 in the Vitrum building; Regus offices took up 1,158 m2 in the Quartier de la Gare; The law firm Speechly Bircham Pfeiffer & Partners, located in Luxembourg since June 2011, took 992 m2 in Kirchberg; At the Cloche d'Or, three operations: MNKS rented an additional 974 m2 in the Vertigo building, Yapital took 630 m2 and Headstart took 629 m2. Finally, Quilvest opted for 704 m2 in the city centre. Rent prices are marked by a great stability in the real estate market. However, the phenomenon of subleasing, which appeared in 2009, has tended to disappear - it represents only 0.45% of the office space leased out. The vacancy rate, back to 5.49%, as always hides large disparities between the most popular neighbourhoods: In Kirchberg, downtown, the Gare area, Limpertsberg it is between 1.33% and 5.09%, while in other areas of less demand, the Cloche d'Or vacancy rate stood at 8.05%, 10.75% for Kalchesbrück and 18.35% for Hamm. In the outskirts of the city, the airport and Bertrange / Bourmicht which still have large areas available, vacancy rates reach 15.59% and 29.04% respectively, while Strassen and Howald fare better (5.69% and 6.15% respectively). Finally, the ambitious urban district of Esch-Belval meanwhile continues its development. The new Southlane 1 building (3,800 m2) was delivered in the first quarter, bringing the stock of offices in the district to a total of 93,090 m2, of which only some 870 m2 are still available. Belval has become the second largest suburb in regard to office stock, just behind the airport. It is worth noting that the forthcoming opening of the University in Esch-Belval should accelerate investment in this area. The investment market has been fairly active in Q1, with eight recorded transactions for a total amount of €135.5 million. The largest (€124m) was for existing buildings of the state, with development projects representing only €8m and transactions for owner-occupiers of €3.5 million. Yields unchanged from 2012: 5.25% in the city, 6.85% in the periphery. For the full year, Property Partners have stated that they expect to experience more or less the same results as in 2012. In addition to 32,100 m2 already delivered during the first three months of 2013, 69,050 m2 should be delivered by the end of the year. Only 28,100 m2 are still available, the rest being already rented. Real estate activity could accelerate in the coming years if we are to believe the official plans for Luxembourg City and Esch-Belval. With the Royal Hamilius project theoretically expected to be launched in 2018, which should have 10,000 m2 of office space, 16,000 m2 of retail and 7,500 m2 of residential space. At the Ban de Gaasperech, they are no less than 413,000 m2 of office space and 105,000 m2 of shops that should break ground by 2030. Among these are the Auchan shopping centre, new offices for PricewaterhouseCoopers and a public garden that will occupy 70 hectares of land. In Esch-Belval, 80,100 m2 of office space is under construction and is expected to be delivered between 2013 and 2015. Given other planned projects, the new urban district of Belval should accommodate a total of 450,000 m2 of office space. In the city centre of Luxembourg, other equally ambitious programmes are awaiting launch: the development of the Place de l'Etoile and the Quartier de la Gare.